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How to manage a Rental Property

So you’re ready to take on managing rental property yourself. Rather than outsourcing every aspect, you’re prepared to learn how to manage rental properties.

Contracts, maintenance, & late fees can be a bit overwhelming as a new property manager but don’t let these tasks scare you away from becoming a savvy property manager.

Choosing to control your business directly is a big one, but it’s also very rewarding.

From setting up basic forms that you can reuse again and again to getting help from third-party services when needed, we’ve got the advice you need to succeed.

Today’s guide will walk you through how to set the right rent prices, find tenants worth your time, and even what to do when you face an eviction situation.

A Table of Contents for Managing Rental Properties:

  • Step 1: Buy & Repair
  • Step 2: Set Prices & Expectations
  • Step 3: Rent Your Property
  • Step 4: Check & Maintain
  • Step 5: Collect Rent
  • Step 6: Evictions
  • Step 7: Accounting

Before We Get Started

Let’s discuss something important before we get into the heart of this guide.

While these steps are laid out in a specific order, it is possible that you may have to deal with some of the steps non-sequentially. Depending on how many properties you manage or your property specifics, you may find yourself working on Step 7 before you reach Step 3.

That’s okay!

No guide, no matter how comprehensive, can give you an exact play-by-play of what you will have to do. Instead, use this guide as a general resource to help you work through different situations as they occur during your time as a property manager.

Step 1: Buy & Repair

The first step of managing any investment or rental property is to buy the property and get it into good repair. If your property is not yet purchased or in rentable condition, these are the two things that you need to work on first.

Many factors go into buying the right investment property and repairing it to be profitable. Due to how many factors there are, this guide will not go into those details.

For more information about buying and repairing rental properties, check out these articles:

Step 2: Set Prices & Expectations

Once you have control of your rental property and feel that it is ready to be rented out, you still have one more important step to complete before you can start looking for tenants. It’s time to set up your rental prices and expectations.

Market Research In Area

Before setting a price, you’ll want to research the average rental price in the area and the number of rental properties available. It’s possible that you already did some of this research during the buying process.

Figure out the following:

  • What is the average income in the area?
  • What is the average family size?
  • What is the average rental price?
  • Does your location have any extra-special benefits (i.e., bus line access, easy highway access, off-street parking) that you can charge more for?

As you take in the other rentals on the market and the going rates, you’ll be able to appropriately price your rental property.

List of Tenant Requirements

In addition to deciding on monthly rent, you also need to determine what requirements you have for a tenant looking to move into your property. By having the ideal tenant already in mind when you begin advertising your property, you’ll have a better chance of finding them.

Consider the following tenant characteristics, keeping in mind that it is illegal to discriminate against tenants:

  • Minimum income
  • Smoking or no smoking?
  • Employment requirement
  • Credit score minimum
  • Past rental history required?
  • Number of references required?

Step 3: Rent Your Property

Now it is the most exciting (and difficult) time of the rental process. It’s time to find new tenants to rent your property to!

Advertising

You will need to advertise your property. Advertise everywhere that you can; paying for additional exposure will be worth it. Try using common home sites like Zillow as well as area-specific publications such as a community magazine.

Finding Good Tenants

Finding any tenant isn’t enough; you want to find good tenants.

Good tenants respect your property, pay their rent on time, and do not cause unnecessary problems. It can be challenging to learn how to discern a good tenant during the interview process, but this skill will be instrumental.

Use a rental questionnaire to help you find out if each potential tenant is a good fit. Remember that you must follow strict rules about what you can and cannot ask about during these interviews. Asking about race, disabilities, and family size are basic no-nos. Following fair housing rules is a requirement.

To find a good tenant, be sure to do the following:

  • Confirm their employment location & income
  • Do a credit and background check
  • Call their references
  • Call their former landlords
  • Have one-on-one, in-person conversations with them

Even if you do all of these things, you might miss something that indicates a bad tenant. Because screening tenants can be tricky, you may benefit from hiring a third-party tenant screening service to help you analyze all gathered information to find the best tenants.

Writing & Reviewing Rental Contracts

Once you have a tenant in mind, it will be time to sign the rental contract.

If you’ve never set up a rental contract before, you will want to gather some great examples from online to set up your own.

Alternatively, hiring a local lawyer to ensure you don’t miss any crucial details is a great idea for your first few contracts. From there, you can work on your own.

Be sure to include information about rental payment timing, eviction procedures, maintenance details, and home rules in the contract. Additionally, be sure to disclose and collect a security deposit when finalizing the agreement.

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When Should a Landlord Hire a Property Management Company?

One of the biggest decisions you’ll make as a landlord is whether you should hire a property management company. Many landlords manage properties on their own or with the help of an employee, such as a resident manager. But sometimes landlords need more help, and that’s when a property management company might make sense.

Property control companies may be a massive asset to your business, but they don’t come cheap. And there are other motives why you might not want or want one. Carefully overview the factors mentioned under to determine if hiring a belongings management employer is the right move on your enterprise.

What Does a Property Management Company Do?

Management corporations deal without delay with possibilities and tenants, saving you time and worry over advertising your rentals, gathering rent, managing preservation and restore problems, responding to tenant proceedings, and even pursuing evictions. Plus, a very good management employer brings its know-how and experience to your private home, giving you the peace of thoughts that comes with understanding your investment is in accurate hands. Finally, a management employer is an unbiased contractor, so you keep away from the hassles of being an agency.

When Should You Hire a Property Management Company?
Although hiring a assets management company has many blessings, the usage of one may be expensive. And, even apart from the value, counting on a belongings management business enterprise is not for all and sundry. Consider the following factors to determine if hiring a property control organization would be a good selection for your enterprise.

You should bear in mind hiring a assets control organisation if:

You have masses of homes or rental units. The more condo homes you personal and the more devices they incorporate, the greater you are probable to benefit from a management employer.

You do not stay near your condominium belongings. If your condo belongings is positioned a long way from in which you stay, hiring a belongings control company may be valuable in dealing with the numerous issues that you may now not be capable of take care of from afar.

You’re not interested in arms-on management. Many landlords stay up for the mission of locating proper tenants and the rewards of maintaining a safe and appealing belongings on their very own. But if you view apartment property ownership strictly as an funding and need little or nothing to do with the everyday management of your residences, take into account hiring assist to control your private home.

Your time is constrained. Even in case you experience palms-on management, you can not have an awful lot time to dedicate on your business, in particular if landlording isn’t always your day process. And if you prefer to spend it slow growing your commercial enterprise, which includes attempting to find new homes, arranging financing for renovations, or changing your commercial enterprise structure, then a control organisation can be a great way to spend your money.

You can find the money for the fee. Hiring a assets management employer is an attractive alternative if you can manage to pay for the expenses. When interviewing corporations, assume to listen prices ranging among 5% and 10% of what you acquire in lease revenue. If it’s a down marketplace and you’re capable of control things yourself (or with the assist of a resident manager or other employees), you can want to maintain doing so till the marketplace turns around.

You’re all of sudden inundated with control tasks. If your business is developing, sooner or later you may find that you need a substrantial amount of help to manage the whole lot well. At that factor, it would make feel to rent a management corporation.

You do not want to be an organisation. If you rent a resident supervisor or other personnel to assist with your house, you become an enterprise. You’ll need to handle payroll and address a bunch of different felony necessities and considerations. But, because a assets management agency is not your employee (it is an independent contractor), and neither are the those who paintings for the corporation, through the use of one you avoid the hassles of being an business enterprise.

Your belongings is part of an less costly housing program. If you participate in an low-cost housing program, matters can get complicated. Usually, in these programs the landlord gets economic assistance, which may be within the form of a furnish, low-interest loan, or tax credit, in go back for agreeing to lease at the least part of the belongings to tenants earning underneath a positive earnings degree. In order to hold receiving the assistance, the landlord must observe a complicated set of regulations. With so much at stake, it’s often really worth hiring a property control corporation that has expertise and experience with the unique housing software in question.